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The impact of tax enforcement on corporate investment efficiency: evidence from the tax administration information system

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  • Liguang Zhang
  • Wanyi Chen
  • Liao Peng

Abstract

Information technology is essential in tax enforcement. This study found that stronger tax enforcement after the tax administration information system reform improved corporate investment efficiency by reducing excessive investment expenditures. The effect is more significant under higher local government fiscal pressure, poorer external information environments, weaker external corporate governance, and stronger tax avoidance motivation. The main mechanism is based on the quality of the accounting information. This study enriches the literature on the economic consequences of tax enforcement and adds investment efficiency as an influential factor, which provides implications for international governments to use information technology to strengthen tax enforcement.

Suggested Citation

  • Liguang Zhang & Wanyi Chen & Liao Peng, 2023. "The impact of tax enforcement on corporate investment efficiency: evidence from the tax administration information system," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 1635-1669, June.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:2:p:1635-1669
    DOI: 10.1111/acfi.12921
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